Magellan Financial Group Insider Stock Sales Prove Timely As Market Valuation Descends To AU$1.9b

Insiders seem to have made the most of their holdings by selling AU$545k worth of Magellan Financial Group Limited (ASX:MFG) stock at an average sell price of AU$8.52 during the past year. After the stock price dropped 14% last week, the company's market value declined by AU$299m, but insiders were able to mitigate their losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Magellan Financial Group

Magellan Financial Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Hamish McLennan, for AU$545k worth of shares, at about AU$8.52 per share. That means that an insider was selling shares at slightly below the current price (AU$10.51). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was 61% of Hamish McLennan's holding. Hamish McLennan was the only individual insider to sell shares in the last twelve months.

In the last twelve months insiders purchased 22.63k shares for AU$191k. But they sold 63.95k shares for AU$545k. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Magellan Financial Group better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Does Magellan Financial Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Magellan Financial Group insiders own about AU$63m worth of shares. That equates to 3.3% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Magellan Financial Group Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Magellan Financial Group insiders. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Magellan Financial Group. Our analysis shows 3 warning signs for Magellan Financial Group (2 are potentially serious!) and we strongly recommend you look at these before investing.

But note: Magellan Financial Group may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.